Madhya Pradesh formalises opposition to Centre's GST plan

The Madhya Pradesh government today formalised its opposition to the proposed Goods and Services Tax (GST) Bill, with the Cabinet declaring that the central government was trying to enter and take over domains which the Constitution had reserved for state governments.

“The state cabinet is of the opinion that the central government wants to enter into the state tax domain and (into) powers to levy taxes granted by the Constitution. Moreover the central government has an intention to strip the state of autonomy in levying tax,” said a government spokesperson.

The cabinet decided to oppose the Centre’s GST Bill as drafted, particularly the provisions that empowers the central government to levy taxes which come under state domain. It will also oppose the proposal for a tribunal in this regard. And, it wants taxation of coal and coal-bed methane to out of the GST ambit.

Madhya Pradesh government has already advised to levy but it can be collected by states. The service tax can have two components Central component and state component.

“The Centre wants to raise the domain of GST and cover those goods already subject to state value added tax (VAT). And, strangely, the Centre wants to bring services into the state VAT domain...if the Centre will impose the GST Bill in its present form, all states will refuse to give input tax rebate as it comes under their domain; moreover, it will trigger tax evasion and fraud,” said a senior government official.

Raghavji, the state’s finance minister, is already on record as strongly opposing the Centre’s proposals on GST. he has said the proposed GST will inflate prices of essential commodities, including foodgrains.

The cabinet also decided to buy 1,241 Mw of power from Reliance Power and 150 Mw from Essar Power, at Rs 2.45 per unit. “Tenders were floated in 2007 in this regard. MP Trading Corporation will enter into a deal for 25 years to purchase power from these companies,” said a spokesman.